Strict conditions must be met for an employer to pay an employee pay-as-you-go holiday pay in casual employment and fixed-term employment placements that exceed 12 months.
The purpose of the Holidays Act 2003 is to promote balance between work and other aspects of employees lives and to provide employees with minimum entitlements to annual holidays that provide the opportunity for rest and recreation.
The Holidays Act 2003 sets minimum leave and holiday entitlements in New Zealand. The purpose is to promote balance between work and other parts of employees' lives, and to provide minimum entitlements for rest and recreation.
Most Holidays Act disputes are not about whether leave exists. They are about payroll setup, record keeping, and calculations. Problems commonly show up when employment ends, when an employee asks to take leave, or when a business is audited and discovers a historical underpayment (or a large liability sitting in the background).
The Holidays Act sets minimum rules for:
The Holidays Act uses different concepts depending on the entitlement. The key ones are:
If your payroll system is set up incorrectly, it can create a rolling liability and a large dispute later. It is usually cheaper to fix it early than to argue about it later.
Paying annual holiday pay "as you go" (often called 8 percent holiday pay) can look simple, but it is one of the most common employer mistakes. It is only lawful in limited situations and only if all conditions are met.
In general terms, annual holiday pay may be paid with an employee's pay only where the employment is genuinely:
Even if one of the scenarios above applies, pay-as-you-go still must be:
Usually no. This is a major reason employers should take pay-as-you-go seriously. If the employment has become regular and ongoing, the better approach is normally to identify the liability and fix the payroll setup rather than hoping the problem goes away.
A frequent error is paying the wrong daily rate, especially where employees have variable hours, allowances, or different rates. Even when the entitlement is clear, the pay calculation can be wrong.
Strict conditions must be met for an employer to pay an employee pay-as-you-go holiday pay in casual employment and fixed-term employment placements that exceed 12 months.
![Sophie Kennett v Polygon GY Developments Limited [2026] NZERA 405 - engineered resignation, redundancy and Holidays Act entitlements](/Images/site/EmploymentAdvocatesAucklandCard.jpg)
Sophie Kennett was required to resign before holiday leave and then re-employed after the break. The ERA held that Polygon had manufactured the termination to minimise Holidays Act liabilities, meaning her employment was continuous. It also found a later redundancy dismissal unjustified because the business sale remained uncertain, redeployment was not properly considered, relevant information was withheld, and no contractual notice was provided. The Authority ordered compensation, lost wages, notice pay, Holidays Act entitlements, wage arrears, interest and a penalty...
Junchen Xu worked for Aurora Developments Limited as a project quantity surveyor. The ERA found he was an employee from 1 March 2021, despite the employer saying the first month was only learning and observation. The ERA also found his redundancy dismissal was unjustified because ADL did not consult, did not provide a proposal, and did not explain the business reasons before ending his employment.
Sasha Lee worked as personal assistant to the sole director of the JNJ Group, but her actual role extended across a range of group businesses. The ERA found she was employed by JNJ Management Limited, not National Holdings Limited, but that JNJ had unjustifiably disadvantaged her by removing key duties without consultation and unjustifiably dismissed her by redundancy. JNJ was ordered to pay $105,342.25 gross wage arrears, $34,373.75 gross annual holiday pay, $17,500 compensation, and 13 weeks' lost wages...
A labourer worked regular 7am-5pm hours at $25/hour but was not paid for 17 weeks. The employer denied knowing him and did not participate. Applying s 6 and the Bryson control/integration/economic reality tests, the ERA found he was a permanent employee, calculated wage arrears at $18,187.50...
A retail assistant was dismissed by WhatsApp during a probation period after the employer relied on KPI metrics from CCTV and 'performance reports' but never raised concerns in writing or held any disciplinary meeting. The ERA held the employer ignored its own staged warning policy and the s...
The Authority ordered remedies, including compensation and payment of wage/holiday pay entitlements. Both Mr Jia and Mr Hou claim that FX made
In Lautusi Isaako v ABS Builders Limited [2025] NZERA 678 (Auckland), the ERA found Mr Isaako was an employee (not a contractor) and was unjustifiably dismissed by a text message. The Authority ordered $15,210 gross reimbursement of 3 months lost wages, $15,000 compensation for humiliation and injury to feelings, plus holiday pay arrears ($1,684.80 annual holidays and $1,275 public holidays). No penalties were ordered. Costs of $2,250 and filing fee reimbursement of $71.55 were awarded.